Qingdao Haier Biomedical Co.,Ltd (SHSE:688139), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the SHSE over the last few months. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Today we will analyse the most recent data on Qingdao Haier BiomedicalLtd's outlook and valuation to see if the opportunity still exists.

What Is Qingdao Haier BiomedicalLtd Worth?

The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we've used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock's cash flows. We find that Qingdao Haier BiomedicalLtd's ratio of 28.93x is trading slightly below its industry peers' ratio of 34.46x, which means if you buy Qingdao Haier BiomedicalLtd today, you'd be paying a decent price for it. And if you believe that Qingdao Haier BiomedicalLtd should be trading at this level in the long run, then there's not much of an upside to gain over and above other industry peers. Furthermore, Qingdao Haier BiomedicalLtd's share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

Can we expect growth from Qingdao Haier BiomedicalLtd?

Future outlook is an important aspect when you're looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it's the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to more than double over the next couple of years, the future seems bright for Qingdao Haier BiomedicalLtd. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? 688139's optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven't considered today, such as the track record of its management team. Have these factors changed since the last time you looked at 688139? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you've been keeping an eye on 688139, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for 688139, which means it's worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example - Qingdao Haier BiomedicalLtd has 1 warning sign we think you should be aware of.

If you are no longer interested in Qingdao Haier BiomedicalLtd, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.